TuckCenter for Global Business and Government

Slaughter & Rees Report - A Policy Wish for April Fools’ Day

April 1, 2013 --

Imagine that the U.S. government could implement a policy change that would stimulate innovation, economic growth, and job creation. Imagine further that this change would require no new fiscal outlays; indeed, its implementation would raise tax revenue. Finally, imagine that some leaders of both parties are currently voicing the merits of such a policy change.

Is this some sort of April Fools’ Day joke? No. The policy change of which we speak is both real and doable: a radical liberalizing of America’s intake of skilled immigrants through the H-1B visa program.

April Fools’ Day is actually a critical one for U.S. immigration policy. For many years, April 1 has been the day U.S. Citizenship and Immigration Services (USCIS) begins accepting new H-1B visa petitions for the subsequent fiscal year. Each H-1B visa allows a company to sponsor a highly-educated foreigner—typical occupations include architects, doctors, engineers, and scientists—to work in the United States for at least three years. The H-1B program, which accounts for nearly all skilled immigrants admitted to work here each year, is currently capped annually at 65,000 for applicants with a bachelor’s degree or higher, plus an additional 20,000 for those with a master’s degree or higher.

Is this enough supply to meet market demand? Not even close. In 2007, by the afternoon of the first day that USCIS began accepting new H-1B petitions, more than 150,000 had already been filed. Any petitions received after close of business the next day were rejected, and USCIS then allocated the 85,000 fiscal 2008 H-1B visas via random lottery.

Skilled immigrants have long supported U.S. jobs and living standards. They bring human capital, financial capital, and connections to opportunities abroad. Won’t more immigrants simply crowd their U.S.-born counterparts out of jobs? No. They tend to create jobs for Americans—in both existing and new companies alike. Of Fortune 500 companies in 2010, 90 were founded by immigrants and another 114 by the children of immigrants. (The diverse list of companies includes Google, eBay, Intel, Apple, IBM, McDonald’s, Oracle, and Home Depot.) The Tuck School is a prime example of this dynamism. Tuck’s teaching and research activities are enriched by the roughly 33 percent of Tuck faculty who are foreign born.

But past need not be prologue. There are worrisome hints that the attractiveness of America is waning as a destination for talented immigrants from dynamic countries. In the past decade, the share of doctoral-degree recipients in science and engineering from China and India who report definite plans to stay in America has been falling. A recent survey of Indian and Chinese immigrant returnees found that 72 percent and 81 percent, respectively, said that opportunities to start their own businesses were better or much better in their home countries than in America.

Congress and the president have talked a lot lately about comprehensive immigration reform. Will they have the courage and vision to expand—and simplify—the H-1B visa program to help strengthen the U.S. economy? Not doing so would be a sad April Fools’ joke indeed.

(For more on immigration’s contributions to America, see Matthew Slaughter’s recent op-ed in The Wall Street Journal here.)

Articles © 2013 Matthew Slaughter and Matthew Rees.  All rights reserved.
Publication © 2013 Trustees of Dartmouth College.  All rights reserved.

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